Reality Check for China: The Government’s failure to isolate Tibet

July 20, 2012

China’s economic retaliations against foreign countries that officially greet the Dalai Lama have ramped up dramatically since 2002. Below is Jayadeva Ranade’s superlative analysis of this trend and its negligible results.

Sentiments of Tibetans inside China and elsewhere would have undoubtedly received a boost with recent developments indicating an apparent turn around in policy and fresh international support for the Dalai Lama. This coincides with the suspension of regular channels of contact between the Chinese Communist Party (CCP) and the Dalai Lama and rising incidence of self-immolations by Tibetans — which number has now reached 39 — including for the first time in front of the Jokhang Temple in central Lhasa.

In mid-May when the Dalai Lama travelled to the United Kingdom to receive the Templeton Prize, British Prime Minister David Cameron met him privately in the basement of St Paul’s Cathedral. Cameron was accompanied by Deputy Prime Minister Nick Clegg.

The meeting took place despite Beijing’s warnings that it could adversely affect Sino-UK relations. A Chinese foreign ministry official said it “hurt the feelings of the Chinese people” and “seriously damaged the relations between China and the UK”. The UK was additionally asked to “stop conniving and supporting Tibetan separatists.” The Global Times, a subsidiary of the party newspaper People’s Daily, went to the extent of demanding suspension of all diplomatic relations with UK ‘for a while’.

Chinese Politburo Standing Committee (PBSC) member, Wu Bangguo, cancelled an official visit to the UK scheduled for late May. Wu Bangguo is due to retire at the upcoming 18th Party Congress to be held this October. China also flexed its economic muscle and Britain’s trade and investment minister, Lord Green and foreign office minister, Jeremy Browne, who had travelled to Beijing, were unable to meet any of the Chinese ministers with whom meetings had been scheduled. A cloud also hangs over the British prime minister’s visit to China later this year. A possibility that British companies may be targetted could be offset, however, by ongoing discussions between British and Chinese officials, including on London becoming a major trading hub for the Chinese yuan and bid by a Chinese state-owned power company to build nuclear power stations in the UK.

The British prime minister’s meeting follows one earlier this April in Ottawa between Canadian Prime Minister Stephen Harper and the Dalai Lama. The European Parliament too is active. On June 14, it adopted a resolution urging the European Union (EU)’s vice president of the Commission for Foreign Affairs and Security Policy to appoint a special coordinator with a mandate to report regularly on Tibet. It asked the EU vice president’s office to address the human rights situation in Tibet at every meeting with representatives of the Chinese government. The EU is on the verge of appointing a special representative for human rights. Taiwan, Japan and South Korea also recently received senior representatives of the Central Tibetan Administration in Dharamsala.

Of major significance, though, is the meeting between Myanmar opposition leader and practicing Buddhist, Aung San Suu Kyi and the Dalai Lama. This ‘private’ meeting, details of which are scanty, took place in London on June 19, when the Dalai Lama was back in the UK for a pre-Olympic tour of various British cities. Tibet supporters have planned protests during the Olympic Games.

Especially worrying for Beijing would be that the meeting represents incrementally increasing contacts between Myanmar’s Buddhists and the Dalai Lama. The first hint was an article in Myanmar Times in September 2009, which passed the official censors. The article, which reported on the Dalai Lama’s visit to Taiwan, assumes relevance as it was the first mention of the Dalai Lama in Myanmar’s official media in 20 years. Later, in November 2011, Myanmar’s Buddhist ecclesiastical hierarchy was represented at the Global Buddhist Congregation held in New Delhi by a strong contingent of its senior-most leaders who remained present throughout the proceedings and met the Dalai Lama. The possibility that Myanmar’s Buddhist clergy might now invite the Dalai Lama to visit Myanmar for a religious function, which initiative the new Myanmar government would find difficult to reject, must worry Beijing. China would perceive such a development as making its south-western flank more vulnerable.

In this backdrop three reports attract notice. A study released late in 2010, by a European university observed that while the Dalai Lama commenced travelling abroad since 1967, China began retaliating to his reception by senior world leaders with punitive economic measures only from 2002. Analysing trade trends between China and 159 countries in the period 1991-2008, it assessed that exports to China from countries where senior leaders received the Dalai Lama declined between 2002-2008, or during Hu Jintao’s term. In such cases there was a drop of 8.1 per cent to 16.9 per cent in the exports of these countries to China. Machinery and transport equipment were mainly affected. The adverse impact lasted, on average, about two years. The study concluded that as China’s economic power grows, it will increasingly use trade as a foreign policy tool. It suggested that if countries receiving the Dalai Lama coordinated policy the economic impact would be lessened.

These findings are contrasted by a report released a month ago by the New York-based Rhodium Group. This reveals a surge in outbound direct investment by Chinese firms in Europe. From less than $1 billion (€700 million) each year between 2004-2008, China’s annual OFDI flows to Europe tripled to roughly $3 billion (€2.3 billion) in 2009 and 2010 before tripling again to almost $10 billion (€7.4 billion) in 2011. China’s OFDI is directed mainly towards France, the UK and Germany. The majority of Chinese OFDI investors are privately-owned companies motivated by the compulsion of surviving in an increasingly competitive domestic market. They want to acquire reputed international brands and high technology. The study discerned no evidence of OFDI declining where nations run afoul of China politically over issues such as Tibet or arms sales. It concludes that, while Chinese officials might threaten to withhold direct investment, Chinese firms are less subject to Beijing’s directions than believed.

Finally, the UN’s new ‘Inclusive Wealth Index’, which faults calculation of national wealth only on the basis of GDP, suggests that China’s economic strength is exaggerated. It places China in third position globally far behind the US. The US is assessed as the world’s biggest economy with an inclusive wealth of $118 trillion in 2008. Japan comes second with $55 trillion and China third with an inclusive wealth of $20 trillion, equivalent to Germany.

With the economic downturn beginning to affect China, Beijing might find that using trade as a coercive foreign policy tool may no longer get major countries to reduce pressure on Tibet and human rights issues.

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First published yesterday in The New Indian Express. Jayadeva Ranade is a former additional secretary in the Cabinet Secretariat, Government of India.